A Biblical View of Economics

Kerby Anderson

In this article we are going to be developing a Christian view of
economics. Although most of us do not think of economics in moral
terms, there has (until the last century) always been a strong
connection between economics and Christian thought.

If you look at the Summa Theologica of Thomas Aquinas, you
find whole sections of his theological work devoted to economic
issues. He asked such questions as: "What is a just price?" or "How
should we deal with poverty?"

Today, these questions, if they are even discussed at all, would be
discussed in a class on economic theory. But in his time, these
were theological questions that were a critical and integral part
of the educational curricula.

In the Protestant Reformation, we find the same thing. In John
Calvin's Institutes of the Christian Religion, whole
sections are devoted to government and economics. So Christians
should not feel that economics is outside the domain of Christian
thinking. If anything, we need to recapture this arena and bring a
strong biblical message to it.

In reality, the Bible speaks to economic issues more than any other
issue. Whole sections of the book of Proverbs and many of the
parables of Jesus deal with economic matters. They tell us what our
attitude should be toward wealth and how a Christian should handle
his or her finances. The Bible also provides a description of human
nature, which helps us evaluate the possible success of an economic
system in society.

The Bible teaches that there are two aspects to human nature.
First, we are created in the image of God and thus able to control
the economic system. But second, human beings are sinful and thus
tend towards greed and exploitation. This points to the need to
protect individuals from human sinfulness in the economic system.
So Christians have a much more balanced view of economics and can
therefore construct economic theories and analyze existing economic
systems.

Christians should see the fallacy of such utopian economic theories
because they fail to take seriously human sinfulness. Instead of
changing people from the inside out as the gospel does, Marxists
believe that people will be changed from the outside in. Change the
economic base, they say, and you will change human beings. This is
one of the reasons that Marxism was doomed to failure, because it
did not take into account human sinfulness and our need for
spiritual redemption.

It is important for Christians to think about the economic arena.
It is a place where much of everyday life takes place, and we can
evaluate economics from a biblical perspective. When we use the
Bible as our framework, we can begin to construct a government and
an economy that liberates human potentiality and limits human
sinfulness.

Many Christians are surprised to find out how much the Bible says
about economic issues. And one of the most important aspects of the
biblical teaching is not the specific economic matters it explores,
but the more general description of human nature.

Economics and Human Nature

When we are looking at either theories of government or theories of
economics, an important starting point is our view of human nature.
This helps us analyze these theories and predict their possible
success in society. Therefore, we must go to the Scriptures to
evaluate the very foundation of each economic theory.

First, the Bible says that human beings are created in the image of
God. This implies that we have rationality and responsibility.
Because we have rationality and volition, we can choose between
various competing products and services. Furthermore, we can
function within a market system in which people can exercise their
power of choice. We are not like the animals that are governed by
instinct. We are governed by rationality and can make meaningful
choices within a market system.

We can also assume that private property can exist within this
system because of the biblical idea of dominion. In Genesis 1:28,
God says we are to subdue the earth and have dominion over the
creation. Certainly one aspect of this is that humans can own
property in which they can exercise their dominion.

Since we have both volition and private property rights, we can
then assume that we should have the freedom to exchange these
private property rights in a free market where goods and services
can be exchanged.

The second part of human nature is also important. The Bible
describes the fall of the world and the fall of mankind. We are
fallen creatures with a sin nature. This sinfulness manifests
itself in selfishness, greed, and exploitation. Thus, we need some
protection in an economic system from the sinful effects of human
interaction.

Since the Bible teaches about the effects of sinful behavior on the
world, we should be concerned about any system that would
concentrate economic power and thereby unleash the ravages of
sinful behavior on the society. Christians, therefore, should
reject state-controlled or centrally controlled economies, which
would concentrate power in the hands of a few sinful individuals.
Instead, we should support an economic system that would disperse
that power and protect us from greed and exploitation.

Finally, we should also recognize that not only is human nature
fallen, but the world is fallen. The world has become a place of
decay and scarcity. In a fallen world, we have to be good managers
of the limited resources that can be made available in a market
economy. God has given us dominion over His creation, and we must
be good stewards of the resources at our disposal.

The free enterprise system has provided the greatest amount of
freedom and the most effective economic gains of any economic
system ever devised. Nevertheless, Christians often wonder if they
can support capitalism. So the rest of this article, we are going
to take a closer look at the free enterprise system.

Capitalism: Foundations

Capitalism had its beginning with the publication of The Wealth
of Nations, written by Adam Smith in 1776. He argued that the
mercantile economic system working at that time in Great Britain
was not the best economic foundation. Instead, he argued that the
wealth of nations could be increased by allowing the individual to
seek his own self-interest and by removing governmental control
over the economy.

His theory rested on three major premises. First, his system was
based upon the observation that people are motivated by self-interest.
He said, "It is not from the benevolence of the butcher,
the brewer, or the baker that we expect our dinner, but from their
regard to their own interest." Smith went on to say that "neither
intends to promote the public interest," yet each is "led by an
invisible hand to promote an end that was not part of [his]
intention."

A second premise of Adam Smith was the acceptance of private
property. Property was not to be held in common but owned and
freely traded in a market system. Profits generated from the use
and exchange of private property rights provided incentive and
became the mechanism that drives the capitalist system.

From a Christian perspective we can see that the basis of private
property rests in our being created in God's image. We can make
choices over property that we can exchange in a market system. The
need for private property grows out of our sinfulness. Our sinful
nature produces laziness, neglect, and slothfulness. Economic
justice can best be achieved if each person is accountable for his
own productivity.

A third premise of Adam Smith's theory was the minimization of the
role of government. Borrowing a phrase from the French physiocrats,
he called this laissez-faire. Smith argued that we should decrease
the role of government and increase the role of a free market.

Historically, capitalism has had a number of advantages. It has
liberated economic potential. It has also provided the foundation
for a great deal of political and economic freedom. When government
is not controlling markets, then there is economic freedom to be
involved in a whole array of entrepreneurial activities.

Capitalism has also led to a great deal of political freedom,
because once you limit the role of government in economics, you
limit the scope of government in other areas. It is no accident
that most of the countries with the greatest political freedom
usually have a great deal of economic freedom.

At the outset, let me say that Christians cannot and should not
endorse every aspect of capitalism. For example, many proponents of
capitalism hold a view known as utilitarianism, which is opposed to
the notion of biblical absolutes. Certainly we must reject this
philosophy. But here I would like to provide an economic
critique.

Capitalism: Economic Criticisms

The first economic criticism is that capitalism leads to
monopolies. These develop for two reasons: too little government
and too much government. Monopolies have occurred in the past
because government has not been willing to exercise its God-given
authority. Government finally stepped in and broke up the big
trusts that were not allowing the free enterprise system to
function correctly.

But in recent decades, the reason for monopolies has often been too
much government. Many of the largest monopolies today are
government sanctioned or sponsored monopolies that prevent true
competition from taking place. The solution is for government to
allow a freer market where competition can take place.

Let me add that many people often call markets with limited
competition monopolies when the term is not appropriate. For
example, the three major U.S. car companies may seem like a
monopoly or oligopoly until you realize that in the market of
consumer durables the true market is the entire western world.

The second criticism of capitalism is that it leads to pollution.
In a capitalistic system, pollutants are considered externalities.
The producer will incur costs that are external to the firm so
often there is no incentive to clean up the pollution. Instead, it
is dumped into areas held in common such as the air or water.

The solution in this case is governmental intervention. But I don't
believe that this should be a justification for building a massive
bureaucracy. We need to find creative ways to direct self-interest
so that people work towards the common good.

For example, most communities use the water supply from a river and
dump treated waste back into the water to flow downstream. Often
there is a tendency to cut corners and leave the waste treatment
problem for those downstream. But if you required that the water
intake pipe be downstream and the waste pipe be upstream you could
insure less pollution problems. It is now in the self-interest of
the community to clean the wastewater being pumped back into the
river. So while there is a need for governmental action, much less
might be needed if we think of creative ways to constrain self-interest
and make it work for the common good.

We can acknowledge that although there are some valid economic
criticisms of capitalism, these can be controlled by limited
governmental control. And when capitalism is wisely controlled, it
generates significant economic prosperity and economic freedom for
its citizens. Next, let us discuss some of the moral problems of
capitalism.

Capitalism: Moral Critiques

One of the first moral arguments against capitalism involves the
issue of greed. And this is why many Christians feel ambivalent
towards the free enterprise system. After all, some critics of
capitalism contend that this economic system makes people
greedy.

To answer this question we need to resolve the following question.
Does capitalism make people greedy or do we already have greedy
people who use the economic freedom of the capitalistic system to
achieve their ends? In light of the biblical description of human
nature, the latter seems more likely.

Because people are sinful and selfish, some are going to use the
capitalist system to feed their greed. But that is not so much a
criticism of capitalism as it is a realization of the human
condition. The goal of capitalism is not to change people but to
protect us from human sinfulness.

Capitalism is a system in which bad people can do the least harm,
and good people have the freedom to do good works. Capitalism works
well if you have completely moral individuals. But it also
functions adequately when you have selfish and greedy people.

Important to this discussion is the realization that there is a
difference between self-interest and selfishness. All people have
self-interest and that can operate in ways that are not selfish.
For example, it is in my self-interest to get a job and earn an
income so that I can support my family. I can do that in ways that
are not selfish.

Adam Smith recognized that every one of us have self-interest and
rather than trying to change that, he made self-interest the motor
of the capitalist system. And before you react to that, consider
the fact that even the gospel appeals to our self-interest. It is
in our self-interest to accept Jesus Christ as our savior so that
our eternal destiny will be assured.

By contrast, other economic systems like socialism ignore the
biblical definitions of human nature. Thus, they allow economic
power to be centralized and concentrate power in the hands of a few
greedy people. Those who complain of the influence major
corporations have on our lives should consider the socialist
alternative of how a few governmental bureaucrats control every
aspect of their lives.

Greed certainly occurs in the capitalist system. But it does not
surface just in this economic system. It is part of our sinfulness.
The solution is not to change the economic system, but to change
human nature with the gospel of Jesus Christ.

In conclusion, we may readily acknowledge that capitalism has its
flaws as an economic system, but it can be controlled to give us a
great deal of economic prosperity and economic freedom.